Can you renew your car insurance early?

You can renew car insurance early during the renewal period which is usually 45 days before expiration. To renew car insurance early, your car insurance company must review and accept the extension.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP® Joel Ohman

UPDATED: Jan 21, 2021

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Here's what you need to know...

Every auto insurance policy will either be canceled or renewed. Your insurance can also expire. When you buy insurance on your personal vehicle, it’s important that you understand what happens to your coverage when it’s canceled and what happens when it renews.

In most cases, you’ll be the one to initiate the cancellation of your policy before it renews. The insurer is always the one that’s in charge of initiating the renewal process.

If you’re a planner, you might be interested in getting all of the paperwork to renew your policy done early. Unfortunately, that’s not always possible when you’re dealing with insurance carriers.

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Why are car insurance renewals necessary?

Shopping for car insurance is often called a chore. Since consumers would much rather shop for a product they want rather than a product they need, most won’t say they enjoy comparing premiums and applying for coverage.

This is why a huge percentage of car insurance consumers will stay loyal to their insurers to avoid comparison shopping again.

When you stay loyal to your insurance after you’ve been insured with the company for one or more terms, your policy will renew.

Policies renew because the original term is only designed to last for either six months or 12 months at a time.

If a carrier were to offer terms that for years at a time, the company wouldn’t be able to charge adequate premiums that accounted for risk.

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Carriers Can’t Change Your Rate Until the Policy Renews

The fact that standard insurance policies are sold in terms is something that protects the consumer.

When you select a term, choose your coverage, apply for insurance, and accept the company’s final rate, your rate is guaranteed for the entire term.

The company can’t technically raise your rates, even if you have a loss until the term is up.

The only time that a carrier can change your rates during your policy period is when you request a change to be made on the policy. This change is called an endorsement.

After a policy is endorsed, you’ll receive an endorsed declarations page. If the premium goes up, you’ll be billed for the difference.

Even though your rate can go up after a change, the insurer can’t change your risk class until the policy renews.

What is a risk class?

Your risk class has a direct effect on your rates. When a carrier is taking your application and reviewing it, the underwriter will assess several different rating factors so that you can be placed into a risk class.

The higher the risk class, the higher the rates. That’s because you’re more likely to file a claim or get into an accident.

There are several different personal rating factors that the company will evaluate.

After evaluating all of these factors, the carrier will either assign you to the preferred, standard, or high-risk driver class.

Here are some of the many factors that can land you in one of the three risk classes:

  • Your age, gender, and marital status
  • Your licensing experience
  • Your driving record
  • Your accident history
  • Your vehicle type and vehicle features
  • Your driving habits
  • Your garaging territory
  • Your insurance status and history
  • Your credit history and credit-based insurance score

What does the insurance company do when they process your renewal?

When your policy period is about to end, the carrier will start to look over your risk class and all of your rating factors to make a renewal decision.

Some of the many things that the company is required to do when renewing your insurance is:

  • Run an electronic Motor Vehicle Report for each driver in the household
  • Review the claims record on file with the company
  • Run the households Claims Loss Underwriting Exchange report to look for claims filed through other insurance companies
  • Run your credit-based insurance score through a consumer reporting agency like LexisNexis
  • Review discounts and see if the carrier is still eligible for the savings

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How soon before the policy renews is it processed?

Your policy won’t officially renew until the policy expires. In every state, licensed companies have to give their policyholders notice before the policy will renew so that the client knows how much they will pay.

Most of the time, the state says that the renewal documents need to be sent out 30 days before the expiration date.

Even so, a lot of companies will start to run the reports about 45 days beforehand to have a buffer.

Can you renew your policy earlier than your expiration date?

Renewals work in the car insurance company’s favor. The carrier gets the opportunity to look over the client’s claims history and their moving violations to see if they want to raise their rates or non-renew their coverage.

You, as the policyholder, can’t request that your renewal is run early.

The insurer has rights and those rights say that the company can wait to calculate a new rate until 30 days before your term ends.

After the new rate has officially been calculated and a new renewal bill is printed, you’re allowed to make a payment to renew the policy at any time up until the expiration date of your current term.

If you receive your renewal declarations page and you’re not happy with your renewal rate increase, you’re free to shop around. You don’t have to keep your coverage with the carrier if you find a better deal.

Always shop for coverage before you decide what to do next. If you find a good deal after comparison shopping online, bind your coverage effective your renewal date for a smooth switch from one company to another.

Comparison-shop today by using our free rate tool below.

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